Monday, October 11, 2010

Maldonado and the Stealth Income Tax

While many factors contribute to Texas' economic strength, the state's constitutional prohibition against an income tax is an especially attractive element for both business and individuals.   Democrats have longed to remove this obstacle to higher taxes, and earlier this year Representative Lon Burnham lamented that Texans are "just too stupid" to understand how beneficial a state income tax would be. 

In the 2009 Legislative session, Representative Diana Maldonado and other pro-taxers thought they had found a way around the Texas Constitution by attaching a measure to House Bill 3983.  Also called the "Circuit Breaker Tax," HB 3983 would have tied property taxes to personal income.  Ostensibly the law would have then allowed individuals with lower incomes to receive a reduction in their property tax rate, prompting proponents to refer to HB3983 as an 'affordable housing' measure.

This so-called affordable housing measure has several troubling implications.  For one, the State would be required to compensate local government entities for any reduction in revenue, placing an additional burden on the State budget.  Even worse is Maldonado and friends' attempt to redistribute income.  Under HB 3983, lower income individuals buying homes above their means would be rewarded with a reduced tax bill, and inevitably, higher-earning individuals who prudently purchased more modest homes would be punished with a heavier property tax bill.  In other words, regardless of your home-purchase decisions, your 'property tax' assessment would be based on your income. 

While Liberal-Progressive Democrats were successful in passing this 'stealth' income tax, Governor Rick Perry wisely vetoed the measure saying, 

(HB 3983) would make the distribution of the property tax burden less equitable by shifting it to middle-class property owners. This would make the property tax function more like a progressive income tax, in that the tax burden would slowly be pushed upwards until only the owners of the most valuable property paid any actual tax.

Diana Maldonado's support of the stealth income tax is just another example of her tax-and-spend approach to government.  Rather than protect one of the elements that has made Texas the strongest state economy, our Representative attempted to radically change our tax structure.  It is time to send pro-tax, pro-big government liberals like Diana Maldonado home and replace them with common-sense Conservatives.


Stacey Hurley-Rider said...

Thank you for bringing this to light... as a Realtor, I want to vote for those who support our basic right of home ownership, without additional burdens of additional taxation. This is an eye opening post!!!

MJSamuelson said...

Just a clarification - the circuit breaker tax was added to that bill in the Senate, by Sen. Kirk Watson from Austin. The record vote in the House that accepted the tax was #1654, on the motion to accept the conference committee report.

Holly Hansen said...

Thanks MJSamuelson- and Rep. Diana Maldonado was on the Conference Committee that pushed through the stealth progressive income tax-many members of the House didn't even get to vote on it.